US Securities and Exchange Commission (SEC) Chairman Gary Gensler did not respond to a direct question in a congressional hearing on whether ether is a security. While the SEC chairman insisted the law is clear on cryptocurrency, Congressman Patrick McHenry argued that the SEC’s regulatory actions say “there’s a lot of uncertainty.”
Lawmaker Investigates SEC Chairman Gary Gensler Over Whether Ether Is A Security
US Securities and Exchange Commission (SEC) Chairman Gary Gensler testified Tuesday before the House Financial Services Committee on SEC oversight. During the hearing, the chairman of the committee, Congressman Patrick McHenry (R-NC), asked the head of the SEC if he ether (ETH) is a commodity or a value.
McHenry explained that in 2018, Bill Hinman, who was the head of the SEC’s Division of Corporate Finance at the time, stated that ether was not a security. Last month, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam expressed his view that ether is a commodity, he continued, adding that the New York State Attorney General stated in a court filing last month that ether is a security. “Clearly, an asset cannot be both a commodity and a value, do you agree?” the legislator asked Gensler.
The SEC chief responded:
In reality, all securities are commodities under the Commodity and Stock Exchange Law. It is that we are excluded commodities, but I would agree that a value cannot also be an excluded commodity and an included commodity.
“How do you categorize ether then?” McHenry questioned Gensler. When the SEC chairman tried to give a generic answer on securities laws, the congressman pressed: “I’m asking you, sitting in your chair now, to make an assessment, under existing laws, is ether a commodity or a worth? ”
While Gensler insisted that he will not discuss any specific token, the congressman noted that the SEC chief has already spoken about one token, bitcoin, and is now being asked to speak about ethereum. Gensler previously said that all crypto tokens except BTCthey are values, but I wouldn’t name any other token in particular.
Ignoring the legislator’s question about ETH Specifically, Gensler emphasized that there are 10,000 to 12,000 crypto tokens out there and proceeded to give the same generic explanation that he has said many times:
If there is a group of businessmen raising money from the public in anticipation of profit based on…
McHenry interrupted Gensler mid-sentence and repeated this question: “I’m asking about one. I’m asking a specific question, Chairman Gensler. I said this in private. It shouldn’t surprise you that I ask you this question. Is ether a commodity or a security?
Gensler replied:
And again, it depends on the facts and the law and if there is a group…
“I’m asking about the facts and a law sitting on your seat and the judgment you’re making,” the congressman reiterated his question after interrupting Gensler again mid-sentence.
“Mr. President, I don’t think you want me to prejudge,” insisted Gensler.
“But you have prejudged about this. You have taken 50 enforcement actions. We’re finding out as we go along, as he files lawsuits, as people get notices from Wells about what is a value in his opinion and in his agency’s opinion. I am asking you a very simple question about the second largest digital asset. What is your point of view? Gensler replied:
My opinion is that if there is a group of individuals in the middle that the public is in…
McHenry interrupted Gensler again mid-sentence and proceeded to ask his next question.
“Let me ask a second question. Do you think it serves the market that the commodities regulator considers an object as a commodity and the securities regulator as a security? Do you think that provides security and robustness to the product? Do you think it provides consumer protection? Do you think it serves the value of innovation? I think ‘no’ should be a very simple answer for you here,” McHenry told Gensler. “Uncertainty is bad, isn’t it?”
When the committee chair confronted Gensler about not responding to his specific question about ETH, the SEC chief responded: “I’m answering it generically because you don’t want me to talk about any one set of facts and circumstances.”
The legislator continued: “Let me take a step back. There is a lack of clarity here in the market. Can you at least agree with that? Gensler replied:
I think the clarity is there. The law is clear.
“Okay, let me be explicit about this. The market doesn’t see it. Their regulatory actions and the CFTC’s regulatory reactions say there is a lot of uncertainty here. The intent of this committee is to address that uncertainty and, in fact, provide a solid legal basis for this,” McHenry emphasized.
Many people have complained that the SEC, under Gensler, takes an enforcement-centric approach to regulating the cryptocurrency sector. Congressman Warren Davidson recently revealed that he is introducing legislation to remove the SEC chairman for “a long series of abuses.”
What do you think about SEC Chairman Gary Gensler dodging the congressman’s question about whether ether is a security? Let us know in the comments section.
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